The NFIB’s Small Business Optimism Index remained at historic highs, but has drifted down by 0.4 points to 104.4. Unfilled jobs and a lack of qualified applicants remain a concern as job openings set a new record and job creation plans increased in strength. NFIB President and CEO Juanita Duggan was quoted saying, “Optimism among small business owners continues to push record highs, but they need workers to generate more sales, provide services, and complete projects...Two of every three of these new jobs are historically created by the small business half of the economy, so it will be Main Street that will continue to drive economic growth.”

The Wall Street Journal (12/14, Morath, Subscription Publication) reported the Labor Department on Friday said the average hourly compensation of private-sector workers, including both pay and benefits, rose by 2.9 percent in the third quarter over 2017, and a small increase over the prior quarter. The Journal highlighted a three percent increase in wages and salaries led the growth. The Journal added that a separate Labor Department measure of hourly wages showed a 3.1 percent increase in November over 2017, which also amounts to the best annual increase in nine years.

The Small Business Optimism Index in November registered a 104.8 reading, a modest decline but nonetheless continuing an exceptionally strong two-year trend. Expected Business Conditions and Expected Real Sales accounted for slightly more than half of the decline. NFIB president and CEO Juanita Duggan is quoted saying, “Small business owners are enthusiastic about the economy and have demonstrated their optimism by raising wages, creating new jobs, and investing in their businesses throughout 2018. ... Overall, small business owners have shown a historic trend in optimism for their businesses and the economy and continue to be the driving force behind economic growth.”

The Wall Street Journal (11/30, Schlesinger, Davis, Subscription Publication) reported that the U.S., Canada and Mexico have signed a new trade deal to replace the NAFTA.

The leaders of the three countries “signed an authorization for the deal on Friday morning in Buenos Aires on the sidelines of the Group of 20 summit, with their ministers signing it shortly after,” Bloomberg News (11/30) reported. “The vast majority of the pact still needs to be ratified by lawmakers in the three countries but the signing enacts a handful of immediate protections, such as from auto tariffs.” Bloomberg News reported that uncertainties “remain, as the original 1994 pact remains in effect, and tariffs on steel and aluminum continue to be a major irritant.”

The Wall Street Journal (11/23, Rubin, Subscription Publication) reported US lawmakers are seeking to pass bipartisan tax legislation after Congress reconvenes after Thanksgiving, a bill which would be a component of government spending legislation for December. The tax bill would deal with a variety of matters, including expired tax decreases and small changes to the IRS, but with Democrats set to take control of the House majority, Congress will not lengthen individual tax cuts which resulted from the 2017 Tax Cuts and Jobs Act, which are set to expire in 2025, and will not implement another 10 percent tax decrease for the middle class, which was previously alluded to by President Trump.

Kudlow Says Next Phase Of Tax Reform Will Not Happen During Lame-Duck Session. Reuters (11/20, Stone, Lambert) reported that NEC Director Kudlow “told reporters on Tuesday the next phase of US tax reform will not happen during the final months of 2018, the ‘lame duck’ period when Republicans will still control Congress. ... Many changes were being considered ‘to make the code more efficient and more pro-growth...flatter rates for everybody, particularly middle class people, get rid of the loopholes,’ Kudlow said to reporters at the White House.” Kudlow continued, “None of this I think will happen [with the current Congress]. ... That doesn’t mean we couldn’t get something in the new session.”

Under the headline, “Opportunity Zones Are Transforming Places And People That Have Been Capital Starved For Decades,” Alex Flachsbart, founder and CEO of Opportunity Alabama, wrote in The Hill (1/11) that “over the course of the past month, Opportunity Zones have gone from the best kept secret of tax reform to front-page news.” He wrote that, “from the Amazon HQ2 decision to locate in an Opportunity Zone to U.S. Treasury Secretary Steve Mnuchin’s prediction of $100 billion in fund activity, Opportunity Zones have garnered more attention in their first year than tax programs with similar goals have received in the past decade.” Flachsbart added that “lost in all that coverage is how this new incentive is reshaping community and economic development by creating potential for new private investment in long-neglected markets.” He believes that “with the right mix of community and private-sector representatives engaged from the start, the coming wave of new capital can be steered toward the places and people that really need it.”

Reuters (1/14, Schroeder) reported that the Fed “is wary of giving” fintechs access to “the country’s financial infrastructure, putting the central bank at odds with other regulators.” The OCC and the FDIC “are exploring granting federal bank-like licenses to” fintechs, and the plan “is part of a broader push by President Donald Trump’s administration to boost small businesses and promote job growth.” The OCC and the FDIC “say such firms can broaden access to financial services.” However, according to fintech executives, “Fed officials in Washington are divided on the issue, with many reluctant to offer any reassurances or even guidance on how fintechs should proceed.” A Fed spokeswoman “declined to comment,” but Fed Governor Lael Brainard, who is helping lead “the Fed’s thinking on the issue,” has urged caution.

CNBC (1/3, Cook) reported that “contrary to growing concerns about a potentially slowing US economy, job creation surged in December as measured by the latest ADP/Moody’s Analytics survey released Thursday.” The report shows private sector employers added 271,000 new jobs in December. Economists had expected only 178,000 new jobs. In a statement, Moody’s Analytics economist Mark Zandi said, “Businesses continue to add aggressively to their payrolls despite the stock market slump and the trade war. Favorable December weather also helped lift the job market. At the current pace of job growth, low unemployment will get even lower.”

The Wall Street Journal (1/6, Ip, Timiraos, Morath, Subscription Publication) reported that the Federal Reserve’s challenge for 2019 is engineering an economic soft landing – moderating growth so inflation is contained while avoiding a recession. While domestically the economy looks strong, falling stock prices and bond yields show recession risks due to slowing foreign economies. The former suggests increasing interest rates, the latter lowering them.

The Wall Street Journal (1/3, Kruger, Subscription Publication) reported that investors began 2018 anticipating inflation, but higher consumer prices have not materialized. According to Bloomberg Barclays data, returns for Treasury inflation-protected securities ended the year down 1.4 percent, while returns for fixed-rate US government debt rose 1.9 percent.

The Startup Magazine (1/13) reported on a variety of ways that startups can look for funding, naming loans, crowdfunding, accelerators, family investments and grants. In the section on grants, Startup said, “One of the advantages of starting a business in the United States is that you have access to dozens of free government grants.”

The Wall Street Journal (12/28, Rudegeair, Subscription Publication) reported on the increased attention fintech companies are devoting to the often-underserved small business lending sector, with Square the latest high-profile company pushing into the space by recently applying for a banking license. By harnessing user data, tech companies can make better determinations of a small business’ ability to repay its loans. PayPal, for example, looks at sellers’ historical volumes selling on Amazon’s platform, along with product reviews left on the site. Over a recent 12-month period, Square made 200,000 business loans, more than three times more loans made by all banks through the Small Business Administration in the same period. Most of the loans were for smaller amounts, the article reports.

Forbes (12/13, Arora) reported banks and credit unions have been making Small Business Administration loans at record volumes. SBA loans come with government guarantees against default that mitigates lender risk, “thereby providing incentives for institutions to lend money to businesses that might not otherwise qualify for term loans.” SBA loans help thousands of small businesses get off the ground each year, helping bolster the economy.

Ad Age (12/12, Slefo) reported that Facebook is entering into search advertising again after five years. Facebook said that “users will now see ads when making retail-related searches in areas such as automotive and e-commerce. While it’s only available in the U.S. and Canada, it may expand the offering to other countries in the near future.” Facebook reportedly began testing the feature in November. Advertisers can test the offering through Ads Manager for free. If it’s successful, “Facebook will implement an auction-style bidding system similar to what it already does for its other ads...The ads will look similar to those that appear in News Feed, meaning that they will sport the same headline, image and text.”

American Banker (12/12, Alix, Subscription Publication) reported, “In a survey of more than 5,500 single-employee firms, 45% relied on a credit card for external financing, compared with 27% that used a loan or line of credit, according to a new report from the Federal Reserve banks of New York, Richmond and Cleveland.” The report “estimated that 46 percent of all these firms have some unmet financing need,” and the “findings suggest that banks could be missing out on opportunities” to provide financing to what the Fed calls “nonemployer firms.” These businesses “represent a significant chunk of the economy, accounting for 81 percent of all small businesses and employing 17 percent of the total US workforce.” They “also generate roughly $1.2 trillion in sales every year.” According to CreditEase Fintech Investment Fund Managing Director Anju Patwardhan, “Some tech and fintech companies, including Amazon, PayPal and Square, have begun to extend credit to these types of small businesses.”

The St. Louis American (1/9, Rivas) reported that on Jan. 1, Missouri’s minimum wage rose to $8.60, following the passage of Proposition B. The minimum wage “will continue to gradually increase – by 85 cents each year – until it reaches $12 an hour in 2023. After 2023, the minimum wage may increase with the rate of the Consumer Price Index (CPI-W) set by the federal government.”

The New York Times (1/9, Schuman) reported that “under President Moon Jae-in, South Korea has raised taxes and the minimum wage in the name of economic growth,” but, “so far, it hasn’t worked out as planned.” According to the Times, “Growth has slowed, unemployment has risen and small-business owners...are complaining.” The Times said South Korea’s “troubles suggest the limits of the state in solving economic problems, especially without addressing the underlying structural issues.”

CNBC (1/2) reported that “as issues of economic inequality, gender discrimination and climate change gained traction with voters in 2018, local governments passed ambitious laws reflecting the changing political atmosphere.” In particular, “there’s a fight brewing over the minimum wage at the national level as Democrats take control of the House of Representatives this week.” According to date from the Economic Policy Institute, “although the federal minimum wage remains at $7.25 an hour, 29 states and Washington D.C. have adopted a higher rate.” CNBC says New York City’s increased minimum wage “could potentially inspire similar increases elsewhere.”

The Hill (1/2, Hellmann) reported that last Wednesday, President Trump “predicted that the Supreme Court would declare ObamaCare unconstitutional, and Democrats and Republicans would have to work together on a new health plan.” Trump was quoted saying, “That case from Texas should win in the Supreme Court. … We should win at the Supreme Court, where this case will go. When we do, we will sit down with the Democrats and we will come up with great health care.”

In a piece for Fox Business (1/3), Pacific Research Institute CEO Sally C. Pipes said that a new Trump Administration proposal that “would permit employers to give their employees monthly tax-free cash allowances to help them pay for coverage in the individual market” could prove to be “revolutionary.” In the short term, “it will help millions gain coverage,” but in the long run, “it could give individuals, rather than employers, control over health insurance dollars.”